Is Getting a Home Mortgage Still Too Difficult?
We always caution home buyers to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago, but the market is still tight. We like to get with our buyers in advance and connect them with some credible lenders which will speed up the process of shopping around and finding the right lender that meets their families needs.
Mortgage lending companies have high standards because they don’t want to be put in a situation where they’re forced to repurchase unpaid loans or end up in a litigation with unreliable lenders. If you want to get the mortgage, it’s important to make sure you and anyone else who will be included on the mortgage have their credit in check.
What Has Happened to the Number of Mortgages?
Due to strict regulations and requirements adopted after the 2008 housing crash, the availability of mortgages has dropped significantly. A recent report by Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. Mortgage companies actually want to lend out their money, but they need to assure themselves that a borrower isn’t too risky before they do so. Here’s a few main things lenders look at to determine your eligibility for a mortgage:
Credit score. This is basically a window into your financial past, and it’s mostly determined by how much debt you use, have available to you, and how reliable you are in paying it off.
Debt to equity ratios. The more money you make and the less money you owe, the higher mortgage you’ll be able to qualify for.
While it’s not as easy to get a mortgage as it was back in the years leading up to the crash in 2008, if you have these factors in check, you should be good to go. If not, we can go over a few alternative loan options that could offer a solution. (read more about getting approved for lending here)
The Effect on the Economy
The housing market is recovering at a slower pace because less potential homebuyers are being offered loans. While the market is still recovering with positive trends, fewer buyers can create a strain on other economic factors like home goods or construction jobs.
The bottom line is that after the housing market boom and bust, mortgage lenders tightened up on their lending standards. It’s not impossible to get a mortgage loan, but it can still be difficult for potential home buyers. If you and whoever else is applying for the loan stay on top of the factors we mentioned above, you’ll have a much better chance at getting approved for lending. And once that’s out of the way, we can get on to the fun stuff - finding you that perfect home!